Louis Kozloff

All articles by Louis Kozloff

 

Is an Argument Challenging Precedent Bad Faith? Pennsylvania Bad Faith Ruling in Asbestos Coverage Case Raises This Important Question

Since 1993, the Pennsylvania Supreme Court’s decision in the J.H. France case has dictated that the continuous trigger rule be applied to determine what insurance policies are triggered for asbestos injury claims. Under J.H. France, coverage is provided by policies in effect from the time the claimant was first exposed to asbestos until injury manifests as mesothelioma. The J.H. France court’s decision was expressly based on the science behind mesothelioma, which indicates that mesothelioma is a continuous, progressive injury that
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Ninth Circuit Confirms the FDIC Cannot Avoid the Insured-Versus-Insured Exclusion

In recent years, courts frequently have held that a D&O policy’s “insured-versus-insured” exclusion bars coverage for claims by the FDIC, as receiver of a failed bank, against the bank’s former directors and officers because the FDIC stands in the shoes of the insured bank. Therefore, the FDIC has tried to circumvent this exclusion by arguing that a policy’s shareholder derivative suit exception to the insured-versus-insured exclusion brought the FDIC’s claim back within coverage. A recent decision by the Ninth Circuit
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Anticipated Decision in Heinz Rescission Litigation Upholds Ruling Voiding $25 Million Insurance Policy Due to Misrepresentations in the Application

In a much anticipated decision, the Third Circuit Court of Appeals upheld the rescission of H.J. Heinz Company’s $25 million production contamination insurance policy because Heinz made material misrepresentations concerning previous product contamination claims when it applied for the policy. H.J. Heinz Company v. Starr Surplus Lines Insurance Company, No. 16-1447 (3d Cir. Jan. 11, 2017). The fact that Heinz’s application misrepresented its history of prior contaminations losses was clear. The insurer’s application asked Heinz to disclose past complaints, recommendations,
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Hartford v. Tempur-Sealy: Can an Insurer Rest Easy When a Claim Does Not Appear to Be Covered?

When a complaint specifically denies that the plaintiff is seeking damages covered by an insurance policy, it seems logical that the insurer would not have a duty to defend. However, taking a very broad view of the duty to defend, a California federal court recently held that an insurer did, in fact, have to provide a defense even though the complaint, on its face, did not include a claim for damages covered under the policy. (Hartford Fire Ins. Co. v.
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Failure to Answer Question on Application for Insurance Truthfully Held to be Grounds for Rescission

Policyholders have an affirmative duty to read the questions asked on an insurance application carefully and will be bound by the answers provided. So stated the United States District Court of the District of Connecticut when it held that a policyholder’s answer of “no” to a question asking whether any of its officers was the subject of a governmental investigation was knowingly false and material to the insurer’s decisions to issue the liability insurance policy. Zurich Am. Ins. Co. v.
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Excess Insurance Does Not Drop Down When Primary Goes Belly Up

Insolvency of a primary insurer represents a tremendous cause for concern for the next layer of excess and umbrella insurers. The Court of Appeals for the Tenth Circuit issued an important and favorable ruling for excess and umbrella insurers last month in Canal Insurance Company v. Montello, Inc., Civil Action No. 14-5039, 2015 U.S. Lexis 20625 (10th Cir. Nov. 27, 2015). The insured, Montello, Inc., a distributor of oil-drilling products, distributed a “viscofier” – a mud drilling liquid agent –
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New York Court Takes a Bite Out of Multiple Occurrences Argument

A New York Federal District Court recently held that an attack by two dogs upon two pedestrians constituted a single occurrence under the dog owners’ homeowners policy.  In so holding, the court rejected use of the “unfortunate events” test to determine the number of occurrences because the policy language required that all injuries arising from the same general conditions would be considered to be the result of one occurrence, regardless of the number of claimants.  As a result, the insurer’s
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Pennsylvania Federal Court Sets Standards for Burden of Proof in Rescission Matter

The ongoing coverage litigation between H.J. Heinz Company and Starr Surplus Lines Insurance Company in the U.S. District Court for the Western District of Pennsylvania has yielded another important decision that is instructive in rescission matters.  As a follow up to our previous report on October 22, 2015 on the court’s order that Starr must produce information from its underwriting files involving other policyholders, the court has now set guidelines for the burden of proof and jury instructions in the
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Pennsylvania Federal Judge Orders an Insurer to Produce Information from Underwriting Files Involving Other Policyholders in a Rescission Dispute

Discovery disputes in insurance coverage litigation frequently concern whether an insurer must produce information about policies issued to other policyholders or other claims against the insurer involving similar policies or circumstances. Policyholders often seek such discovery to compare the insurer’s position in the disputed claim with positions it may have taken in other claims or under other policies. Insurers typically resist such discovery as being irrelevant to issues involving the particular policy or claim at issue in the litigation. A
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Pennsylvania Supreme Court Holds that an Insurer’s Consent to Settle is Not Required if Insurer Is Defending Under Reservation of Rights

The Pennsylvania appellate courts have kept insurance coverage lawyers on their toes this summer. Weeks after the Pennsylvania Superior Court’s decision in Selective Way Insurance Co. v. Hospitality Group Services, Inc. provided guidance on when the statute of limitations for an insurance coverage declaratory judgment action accrues, on July 21, 2015, the state’s Supreme Court issued its much anticipated decision in Babcock & Wilcox Company v. American Nuclear Insurers. In Babcock & Wilcox, the Supreme Court held that when an insurer
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In Pennsylvania, a Cause of Action for Declaratory Judgment Accrues When an Insurer has Sufficient Facts to Believe that its Policy Does Not Provide Coverage

When an insurer is asked to cover a liability claim for which coverage is in doubt, the prudent course of action is to provide a defense subject to a reservation of rights. The reservation of rights preserves the insurer’s ability to deny coverage, for either defense and indemnity, if it is determined that the claim is not covered under the policy. In many instances, a reservation of rights is accompanied with the filing of a declaratory judgment action in which
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No Bad Faith Where Insurer’s Valuation of Claimant’s Injuries is in the Ballpark

In Hicks v. Progressive Casualty Insurance Co., 2015 U.S. Dist. LEXIS 71985 (C.D. Cal. June 1, 2015), the district court held that Progressive did not breach the implied covenant of good faith and fair dealing through its investigation of, and subsequent dispute of, plaintiff Chris Hicks’ damages in an arbitration of Hicks’ underinsured motorist claim. Hicks was a passenger in an automobile driven by his mother and insured by Progressive when, on August 12, 2006, the automobile was involved in
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